Making sense (and, sometimes, nonsense) out of Current News, Issues, Politics

Thursday, July 14, 2016

Americans Waste Billions on College Education

As of this writing, student loan debt is rapidly closing in on a record $1.4 trillion. But, more importantly, the average college graduate's debt has risen 350% in just the last 22 years while overall inflation has only risen 164% over the same period:

Yet, over the same period, real college graduate incomes have been relatively flat:

Combine this with the fact that, since 1993, the percentage of graduates with debt has risen from 45% to 70%. It doesn't take a math degree to figure out why 27.3% of student loans are in delinquency following the normal 6-month grace period after graduation. The simple fact, is that high and rapidly-rising student debt, high delinquency rates, and flat wages, mean that our society isn't cranking out enough high-paying college-level jobs to support all that debt. That fact couldn't be any clearer than shown on these two graphs from the Federal Reserve Bank of New York, as published by the Washington Post:

Essentially, 38% of college graduates are working below their achieved education levels. And, only 27.3% of those with degrees are employed in jobs that match their original chosen fields. Other studies confirm these results. For example, in 2014, Career Builder found that, for the class of 2014, 51% of graduates wound up working in jobs that required "no" degree. Another study by the Center for College Affordability and Productivity found that 37% of college grads were working in jobs that only required a high school diploma.

With statistic like these, it's no wonder they can't repay their loans. A fact that hurts their credit ratings right out of the box.

So, the solution by Democrats such as Hillary Clinton, Bernie Sanders, and Barack Obama is to make college education debt free. In other words, let the taxpayers pay the debt off. But, that ignores the basic problem of graduating too many college students for the number of jobs available to them. For that reason, we, as a country should be de-emphasizing the importance of a college degree. Instead, the focus should shift to trade schools as the means to making a good salary. In fact, all of these jobs pay more than what a median college job is paying:

The simple fact is that our society is wrongly leading people to believe that any college degree will get you a good paying job. When you have so few people working in the college major that they spent so much money to get, it is a complete financial waste, and the taxpayers should not be burdened with that waste. As long as colleges and universities are able to turn students away because of the sheer volume of applicants, tuitions and student debt will rise unabated. However, if we can get to a point where colleges can't fill the number of slots available, tuition rates won't increase nearly as quickly; or may even fall as they attempt to attract more students. That's simple college level economics.